Macpherson Kelley Special Counsel Mark Metzeling and Associate Eloise Prellerdiscuss how the outcome of the Federal Election will affect foreign-owned subsidiaries.

Foreign-owned subsidiaries tend to walk a fine line between complying and administering a parent company’s requests, while maintaining a workable Australian operation (from a legal and practical perspective).

This balancing act is compounded in Australia when a Federal election is called. The rules of the game will ultimately change depending on which of the major parties forms government and businesses, both domestic and foreign, will be impacted by those changes.

In readiness for the election on 18 May 2019, we identified key pledges affecting certain industries and areas of law affecting our foreign-owned subsidiary clients.

Likely to be implemented by the party that forms government, the points below may affect the way your client’s foreign-owned subsidiary operates in Australia post 18 May.

Tax

Focus is on crack down of overseas movement of profits and tax minimisation strategies.

Crack down on the movement of profits offshore by multinationals.

Apply fixed tax rate on distributions from family trusts to avoid tax minimisation strategies e.g. through distribution to lower taxed family members.

Tax

Focus is on assisting SME businesses in Australia.

Instant asset write-off for business increased from $25,000 to $30,000.00. Will be accessible by businesses with a turnover of up to $50million.

SME business tax rate is currently 27.5% and will be reduced to 25% by 2021-22 FY.

Employment and Migration

Introduction of legislation preventing “permanent casuals”.

Pledges to increase the award wage to a “living wage”

Reintroducing penalty rates for employees

Will limit the granting of skilled overseas worker visas to “genuine skill shortage” industries, and there will be a requirement that a business must seek to fill the position with local Australian workers prior to hiring an employee with a work visa.

Labour hire companies will be required to provide workers with the same pay and conditions as those employed directly

Build a dedicated heavy vehicle access road to the Port of Gladstone, which is Queensland’s largest multi-commodity port and the world’s fourth largest coal export terminal.

International Trade

Focus is on increase in trade in the global marketplace.

Prioritisation of a free trade agreement with the European Union

Expansion of the Trans-Pacific Partnership

Implementation of the India Economic Strategy

It will seek a free trade agreement with the UK once Brexit is finalised

It will strengthen the trade agreement with the 4 nation Pacific Alliance

Provision of additional $60million for Export Market Development Grants

Climate and environment

Extend the existing pollution cap which will affect 110 more businesses than existing thresholds, though the agricultural sector is excluded from this scheme.

Implementation of carbon targets for all Australian business, though business may be able to apply industrial and international carbon offsets, to enable the Australian business to meet the carbon targets.

INCENTIVE: Australian businesses can make money by reducing pollution below their baseline, and selling these ‘credits’ to third parties.Pledges NOT to introduce:

Implementation of small business energy efficiency programs via the provision of $50 million in grant money to ‘eligible businesses’. There is up to $25,000.00 per grant available to install new energy efficient equipment or improve energy management in your business.

Establishment of a Regional and Remote Communities Reliability Fund, which is targeted at agricultural and mining industries. This entails $50.4 million in grants for up to 50 off-grid and fringe-of-grid communities and businesses to investigate the establishment of micro-grids.

Manufacturing

Implementation of stronger measures to minimise the illegal dumping of cheap foreign products in the Australian market.

Tourism

$1 billion local investment fund for implementing and investing in tourism projects in northern Australia (Western Australia, Queensland, and the Northern Territory).

Please contact the authors if you have any queries about this article or topic.

Mark Metzelingis the highest-ranked Queensland lawyer for trade mark prosecution and strategy. He is a qualified solicitor and registered Trade Marks attorney, who has a Masters of Intellectual Property Laws, a Master of Laws and a Bachelor of Applied Science (Biochemistry). Mark is an expert in intellectual property strategy, brand protection and securing Trade Mark rights. Contact Mark at Mark.Metzeling@mk.com.au or connect via LinkedIn.

Associate Eloise Preller specialises in both Commercial and Corporate law and advises clients from various industry sectors on establishing a business, conducting business with consumers and achieving their business goals. She acts on behalf of sole traders, partnerships, joint ventures, corporations and charities across the technology and services, manufacturing, pharmaceuticals and health technologies, retail, hospitality and food and agribusiness industries. Contact Eloise at eloise.preller@mk.com.au or connect via LinkedIn